Thursday, November 29, 2018

Legislation passed last year in Russia saw the creation of a centralized database of permanently blocked sites.

Search companies are required to connect their systems to this database (known locally as FGIS) so that such banned sites can be preemptively removed from search results. However, while most companies are acting as required, Google has thus far failed to connect to the resource.

As a result, Google was recently found to be in breach of federal law. The company was given a warning and told to connect within three days and begin filtering, but the tech giant failed to do so. It now faces an administrative fine of between 500,000 and 700,000 rubles (US$7,611 to US$10,656). On Monday, telecoms regulator Roscomnadzor confirmed it had officially opened a case against the US search giant.

While negotiations are still underway for Google to comply moving forward, it’s now clear that small fines don’t act as a deterrent to companies with huge revenue streams. It’s something the Russian government now wishes to address.

As part of reforms under consideration to tackle these types of violations, tech companies could face fines up to 1% of local revenue. In Google’s case, that’s around 450.2 million rubles (US$6.7m).

Roscomnadzor says that Google, Facebook, Telegram and other tech giants remain in breach of various local laws, including failure to hand over encryption keys to the government and neglecting to hold personal data of citizens locally in Russia.

A Reuters source told the news outlet that members of the presidential administration have already sent the proposals to representatives of several Russian and foreign Internet companies to receive feedback on the amendments.

The proposals, seen by Reuters but not published, indicate amendments to the Code of Administrative Offenses of Russia, which will see fines of 1% of annual revenue for repeated infringements of local law, with a minimum fine of 1.5 million rubles (US$22,400) if the company makes no money locally.

While the draft proposals appear to target large companies such as Google, Facebook and local search giant Yandex, services that provide access to blocked sites (such as VPNs and proxy services) will also be covered the legislation.

Messenger services like Telegram are also a target and even Netflix, if the company collects personal data of Russian citizens and stores it outside the country.

Additionally, companies that repeatedly breach the regulations could be subject to web-blocking themselves, something that Yandex was threatened with earlier this year in a response to a copyright complaint from several TV companies.

A source from an unnamed ‘foreign’ Internet company told Reuters that working out the precise levels of fines could be difficult for the Russian government.

“Yes, for foreign companies [the levels of fines under consideration] are already a substantial amount, but it is not clear how they will be calculated and charged,” the source said.

“Many foreign companies do not have a legal entity in Russia, while others have only a representative office that performs only marketing functions, and therefore its revenue is minimal. How much a company really earns in Russia, only the company knows.”